Outside the crease

Nimbus' $612 million media rights deal for live cricket over four years is one high-risk proposition.

Months after Nimbus Sport bagged Board of Control for Cricket in India's (BBCI's) four-year global media rights for $612.2 million, speculation remains rife whether the company will be able to recover the money, though Nimbus says it is confident of doing that and more.

The media rights cover TV, radio and broadband, though not cellphone relays, for BCCI matches up until the end of FY10. "Clearly, Nimbus has grossly overpaid," says Rukin Kizilbash, vice-president of ad sales, Ten Sports, a rival that had tried but failed to win the deal, "At the end of four years, the company will probably be short by $200 million."

By Ten's calculations, Nimbus stands to garner $120 million from overseas broadcasters, $40 million from DTH subscription and $150 million as distribution revenue. This means that the ad intake would have to be over $300 million to escape red ink.

Prasana Krishnan, vice-president, business development, Nimbus Sport, however, shows no sign of nerves. All revenue streams taken together, he says, Nimbus expects its revenues to cross $825 million over four years. Exactly how, he doesn't quite say.

Krishnan or Kizilbash: who will be proved right?

The facts so far suggest that Nimbus has stepped too far "out of its crease", so to speak, on the risk-return scale for its own good. The precise payment schedule is unavailable, but we do have a yardstick for a rough profit/loss calculation at this stage.

By BCCI's tender, the India-England series held in March, the only deal-covered telecast till now (the next Nimbus telecast is in January 2007), was "weighted" at 11.5 per cent of the contract: $70.4 million, that is.

The series was broadcast by Sahara TV, free-to-air, with Doordarshan getting a mandatory feed. Sources indicate that Nimbus got no distribution/subscription revenue from Sahara, though all the ad revenue. So: how much ad revenue did Nimbus get? About $30 million short of the target, say insiders.

Even under a best case scenario, back-of-the-envelope arithmetic suggests that Nimbus fell short by some $20 million. According to TAM data, there were 48,794 seconds of ad airtime during the seven one-day matches (ODIs) and 44,856 seconds during the three test matches.

Taking the average ad rates for 10 seconds at Rs 35,000 for tests and Rs 1.5 lakh for ODIs (rates are negotiable), the revenue generated by ad slots on Sahara comes to Rs 88.9 crore.

In addition, media experts estimate revenues from ticker tape signs and the like at no more than Rs 4.4 crore. The Doordarshan telecast gave Nimbus an additional Rs 39.75 crore "" 75 per cent of the Rs 53 crore in collections, as per the revenue-sharing arrangement.

That's a domestic revenue total of Rs 133 crore. And that, mind you, is a best case scenario: airtime buyers such as Mona Jain, executive vice-president, ZenithOptimedia, say that Nokia got 120 seconds per day at just Rs 29,000 per 10-second slot.

GroupM, with its media clout, claims to have bought slots even cheaper for such clients as PepsiCo, Hero Honda and UB. And free "bonus" slots are common practice in bulk airtime deals.

Krishnan, though, insists that the average rate was Rs 2 lakh per 10 seconds on Sahara for ODIs. But even by Krishnan's claim, a rate that Cheil's media honcho Bhavana Mittal says is in the range of Star Plus' primetime (and thus more wishful than realistic), Nimbus would have grossed just Rs 24.4 crore more than the Rs 133 crore estimated above as domestic revenues.

Add the revenues from the resale of overseas rights, placed at Rs 80 crore by market sources, and net-net, Nimbus still looks anything between $18-23 million short of the presumed target of $70.4 million.

So, having not quite connected on debut, has the fear of a grand stumping sunk in?

To be fair, four years is no short innings. It's not over yet: there's more cricket to come.

Industry insiders say Nimbus has signed a four-year contract with UK's Sky Sports for roughly Rs 80 crore, BBC Radio for about Rs 1 crore, Europe's ARY for Rs 36 crore, Adlabs for Rs 49.5 crore and US-based Echostar for Rs 247.5 crore. Other Asian deals could be worth Rs 95.8 crore over four years.

Still, it's not nearly enough, and there's no doubt Nimbus is playing in danger zone. Does it have any hope of thwacking the deal hard over the "long on boundary" towards the "slog end" of four years?

By then, to make a case for optimism, it may have been on the field long enough to have got its eyes "in", as cricket coaches are wont to say.

What's more, cricket is a game of intense passion across the subcontinent, and the India-England series is no indicator of the enthusiasm that could be sparked once India gets to face a team far closer home.